Financial Crimes Digest-Posts on LinkedIn

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     The SDN List stands for the Specially Designated Nationals and  Blocked Persons List. It is a list maintained by the U.S. Department of  the Treasury's Office of Foreign Assets Control (OFAC). This list includes individuals, groups, and entities that are subject to economic sanctions under U.S. law.     

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Risk appetite refers to the level of risk that an organization is willing to accept in pursuit of their objectives. It represents the amount and type of risk that an entity is prepared to take on in order to achieve its goals, considering factors such as its tolerance for uncertainty, potential losses, and desired returns. 

 Dual-use goods refer to items, materials, equipment, and technologies that can be used for both civilian and military purposes. These goods have legitimate commercial applications but also have the potential to be repurposed for military or proliferation activities. The term "dual-use" reflects the dual nature of these items, as they can serve both peaceful and military purposes. 

Financial institutions are facing compliance hurdles that slows them down from expanding their business.

On the other hand, regulatory bodies require Anti-money laundering (AML) and sanctions compliance agile adaptation of processes to maintain optimum compliance standards.

The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) oversees U.S. economic and trade sanctions programs to safeguard national security and foreign policy objectives. To ensure compliance, organizations under U.S. jurisdiction, along with foreign entities dealing with the U.S., must adopt a risk-based approach through a sanctions compliance program (SCP).

 Comprehensive sanctions refer to a set of measures imposed by one or more countries or international organizations against another country, usually in response to certain actions or behaviors deemed unacceptable. These sanctions are "comprehensive" in the sense that they often target various sectors of the economy and different aspects of a country's interactions with the international community. 

 Terrorist financing refers to the financial support provided to terrorist organizations or individuals to facilitate their activities, which may include planning, carrying out, or promoting acts of terrorism. This type of financing is a critical component of the overall effort to combat terrorism, as it enables terrorists to acquire the necessary resources to carry out their operations. 

 The Basel Committee on Banking Supervision (BCBS) which establishes international banking standards, has emphasized the importance of the three lines of defense in its guidance on “Sound management of risks related to money laundering and financing of terrorism” 

 The Egmont Group’s main goals are to enhance member capabilities and improve information and expertise sharing among them. The Egmont Group has four unique working groups to help achieve these goals, each with its own mandate to support member FIUs.

Mirror trading (MT) refers to a practice in the financial world where investors simultaneously buy and sell the same securities or assets in different markets.
One aspect of MT is mirrored transactions, where you simultaneously buy and sell the same securities, like bonds or stocks, to take advantage of market movements..

Financial Crime Risk Assessments are part of the toolkit that Financial Institutions (FI) use to strengthen their compliance framework. These assessments identify key risk areas, evaluate how well these risks are handled, and help allocate resources based on the level of risk.

OFAC Sanctions (U.S. Department of the Treasury's Office of Foreign Assets Control), EU (European Union) Sanctions, and UN (United Nations) Sanctions are measures imposed by different entities to achieve various objectives, including promoting international peace and security, addressing human rights abuses, and combating terrorism.  

 Proliferation financing in simple words refers to the provision of funds or financial services that are used to support the manufacture, acquisition, possession, development, export, transfer, or use of weapons of mass destruction (WMDs) and their means of delivery, in violation of national laws or international obligations. 

  Anti-Bribery and Corruption (ABC) are rules that stop bribery and other corrupt actions. Businesses must follow these rules to protect their reputation and avoid big fines. ABC keeps business fair by preventing bribery from affecting decisions and keeping competition equal. 

 Sanctions are measures put in place by governments or international organizations to discourage illegal behavior or force a change in behavior. They can be applied to countries, entities, individuals, organizations, or vessels.  

Credit Cards (so called Plastic money) are the most commonly used for daily commercial purposes. They offer different features and benefits to cater to the diverse needs of consumers. A credit card is a financial product that allows the cardholder to borrow money from the issuer to make purchases or withdraw cash. 

Correspondent banking refers to the relationship between two banks where one bank (the correspondent bank) provides banking services on behalf of another bank (the respondent bank). It is a crucial mechanism for facilitating domestic and international financial transactions. 

 Developing a compliance program should be based on a risk-based approach and must involve identifying the specific risks that an organization faces. Developing a compliance program involves creating a structured framework to ensure that an organization adheres to relevant laws, regulations, and internal policies. 

 In some correspondent relationships, the respondent bank’s customers are permitted to conduct their own transactions—including sending wire transfers, making and withdrawing deposits, and maintaining checking accounts— through the respondent bank’s correspondent account without first clearing the transactions through the respondent bank. 

 Trade-based money laundering (TBML) refers to the process of disguising illicitly obtained funds through legitimate international trade transactions. 

Fintech, short for financial technology, is the application of technology in the financial sector to improve financial services, processes and customer experiences. 

 The USA PATRIOT Act, which stands for "Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act," is a law passed by the United States Congress in response to the terrorist attacks of September 11, 2001.

The Office of Foreign Assets Control (OFAC) is a financial intelligence and enforcement agency of the U.S. Treasury Department that administers and enforces economic and trade sanctions in support of U.S. national security and foreign policy objectives. 

Transaction monitoring is a critical part of compliance in financial institutions and other businesses. It is the process of reviewing and analyzing financial transactions to identify suspicious or illegal activities, such as money laundering, terrorist financing, fraud, or other financial crimes.